smaller cities: Bigger opportunities

Bigger opportunity in India's smaller cities

Smaller cities are scoring over metros in terms of growing urbanisation, and cities such as Jalandhar, Aurangabad, Bhubhaneshwar, Agra and Raipur are believed to be the next ‘cities of opportunities’.

According to the latest Morgan Stanley research report, ‘AlphaWise City Vibrancy Index: A Guide to India’s Urbanization’, households in these cities earn more than India’s average urban household.

Centre for Monitoring Indian Economy (CMIE) pegs the quarterly average household income at about Rs 45,000 per urban household, whereas in cities such as Jalandhar, Bhubaneswar, Guwahati and Aurangabad have a quarterly average household income of above Rs 65,000.

The report measures the key drivers of urbanisation such as physical infrastructure, financial penetration, consumer services and job listings in the top 200 cities (by population) in India. The vibrancy index is aimed at helping investors evaluate companies’ strategic positioning in urban centers and monitor sector trends.

Urbanisation is important to the process of city formation and building India’s competitive strength in the global markets, feels Ridham Desai, head of India research and India strategist at Morgan Stanley. The relative performance of components of the vibrancy index could give us insight into potential for urbanisation. For example, a city’s rate of urbanisation may be low but it may be (that) financial penetration may be high. This gives us potential for consumer services or job creation in that city.

Bangalore, Hyderabad and Pune are the most vibrant cities among the top 50 cities in India on the AlphaWise City Vibrancy Index. Tier-II cities like Mysore and Meerut rank in the top 10. Ironically, the country’s financial capital, Mumbai, ranks 21st among India’s top 50 cities.